U.S. bond futures seeing liquidation today

First-time jobless claims unexpectedly fell by 7,000 to 340,000 in the week ended March 2, the lowest since the period ended Jan. 19, according to data today from the Labor Department in Washington. This is now two days in a row with very positive labor market data from the U.S., and the U.S. equity indexes are continuing to rally, with the MAR 13 E-mini S&P 500 trading up 4.75 pts to 1543.75.

Everyone is waiting for the big employment numbers tomorrow, and the biggest mover could end up being the bond market. If we get a big surprise to the upside, we could see a big sell-off in the U.S. bond market. The JUN13 U.S. 10-year note is down 14 ticks today, and is experiencing some weakness as the recent jobs figures of today and yesterday have been surprises to the upside.

One of the big stories in the grain markets is in wheat. Wheat futures have been in a strong and steady downtrend since trading over the $9 level last November. Today, MAY13 Wheat futures are down $.01 to $6.82. We see strong resistance right below the $7.50 level and see the first key support/target level at around $6.70. If wheat does get a big liquidation down to the low $6s, we could see a big short covering rally. Also, The Energy Department’s Energy Information Administration reported that natural gas in storage shrank by 146 billion cubic feet to 2.083 trillion cubic feet in the week ended March 1.

Natural Gas is one of the biggest movers on the commodities board today, trading up $.11 to $3.58 (APR13 contract). Natural Gas has been in a volatile but clear uptrend since last May, and we believe this market could continue to march higher, possibly testing the $4 level before the year ends.

We focus more on the U.S. 10-year note today. This market has been in a pure range trade since last August, and we look for the breakout to occur to the downside. We have resistance at 132 for the JUN13 contract, and our first support is very close to being hit at 130’16. Our next key level to watch for is 129’16. For this market, tomorrow’s labor report could be huge. If we get a surprise to the upside, we would not be surprised to see the bond market tank and for the 10-year note to approach the 129 ’16 level.

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About the Author

Anthony Lazzara, CEO of Newport Beach, Calif., commodities investment firm Lido Isle Advisors, spent 10 years as a trader and floor broker at the Chicago Board of Trade and Chicago Mercantile Exchange. Anthony has significant experience in the energy, fixed income, and equity futures markets. After being a long-time independent futures trader, Anthony saw a tremendous opportunity to educate investors on how to invest in professional traders. Anthony is now focused on his duty as CEO of Lido Isle Advisors.